OCBC AL-AMIN BANK BERHAD Company No. 200801017151 … Results/pdf... · 2020. 6. 9. · ocbc...

UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2020

Domiciled in Malaysia

Registered Office:

19th Floor Menara OCBC

18 Jalan Tun Perak

50050 Kuala Lumpur

OCBC AL-AMIN BANK BERHAD

Company No. 200801017151 (818444-T)

(Incorporated in Malaysia)





CONTENTS PAGE

STATEMENT OF FINANCIAL POSITION 1

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2

STATEMENT OF CHANGES IN EQUITY 3

STATEMENT OF CASH FLOWS 4

NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS 5 - 24

Company No. 200801017151 (818444-T)


Company No. 200801017151 (818444-T)



STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2020

31 March 31 December

2020 2019

ASSETS Note RM'000 RM'000

Cash and cash equivalents 9 789,584 958,140

Financial assets at fair value through profit or loss ("FVTPL") 10 16,250 16,330

Financial investments at fair value through other

comprehensive income ("FVOCI") 11 4,293,870 4,206,452

Financing and advances 12 11,914,816 11,805,289

Derivative financial assets 14 21,855 12,289

Other assets 15 38,888 70,569

Tax recoverable 8,151 5,726

Statutory deposits with Bank Negara Malaysia ("BNM") 240,100 309,300

Property and equipment 6,843 7,421

Right-of-use ("ROU") assets 3,198 3,017

Deferred tax assets 5,525 2,586

Total assets 17,339,080 17,397,119

LIABILITIES

Deposits from customers 16 12,189,127 12,591,597

Investment accounts due to designated financial institution 17 2,008,499 1,986,054

Deposits and placements of banks and other financial institutions 18 1,024,291 763,189

Bills and acceptances payable 18,643 17,535

Derivative financial liabilities 14 22,551 12,442

Other liabilities 19 197,451 170,126

Provision for taxation and zakat 62 50

Subordinated sukuk 20 200,000 200,000

Total liabilities 15,660,624 15,740,993

EQUITY

Share capital 555,000 555,000

Reserves 1,123,456 1,101,126

Total equity 1,678,456 1,656,126

Total liabilities and equity 17,339,080 17,397,119

Commitments and contingencies 30 3,866,489 4,140,499

The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements of the Bank for the financial year ended 31 December 2019 and the accompanying explanatory notes to the unaudited condensed interim financial statements.

1


Company No. 200801017151 (818444-T)



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


31 March 31 March

2020 2019

Note RM'000 RM'000

Income derived from investment of depositors' funds and others 21 161,049 158,558

Income derived from investment of investment account funds 22 20,233 14,343

Income derived from investment of shareholder's funds 23 35,552 29,348

Impairment allowance and provisions 24 (41,055) (27,478)

Total distributable income 175,779 174,771

Income attributable to depositors 25 (89,307) (91,545)

Income attributable to investment account holder 26 (14,045) (10,698)

Total net income 72,427 72,528

Operating expenses 27 (48,047) (47,459)

Profit before taxation and zakat 24,380 25,069

Income tax expense 28 (4,480) (5,139)

Zakat (13) -

Profit for the period 19,887 19,930

Other comprehensive income, net of income tax

Items that may be subsequently reclassified to profit or loss

Fair value reserve (debt instruments)

- Change in fair value 11,028 14,616

- Transferred to profit or loss (7,809) (681)

- Related tax (770) (3,342)

Change in expected credit loss ("ECL") reserve on debt instruments at FVOCI (6) (71)

Other comprehensive income for the period, net of income tax 2,443 10,522

Total comprehensive income for the period 22,330 30,452

Profit attributable to owner of the Bank 19,887 19,930

Total comprehensive income attributable to the owner of the Bank 22,330 30,452

Basic earnings per ordinary share (sen) 10.75 10.77

Year-To-Date Ended


2


Company No. 200801017151 (818444-T)


STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2020

Distributable

Share Regulatory ECL Fair Value Retained Total

capital reserve reserve reserve earnings equity

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2020 555,000 91,000 153 23,778 986,195 1,656,126

Fair value reserve

- Change in fair value - - - 11,028 - 11,028

- Transferred to profit or loss - - - (7,809) - (7,809)

- Related tax - - - (770) - (770)

Change in ECL reserve - - (6) - - (6)

Total other comprehensive (expense)/income for the period - - (6) 2,449 - 2,443

Profit for the period - - - - 19,887 19,887

Total comprehensive (expense)/income for the period - - (6) 2,449 19,887 22,330

At 31 March 2020 555,000 91,000 147 26,227 1,006,082 1,678,456

At 1 January 2019 555,000 91,000 249 2,610 821,721 1,470,580

Fair value reserve

- Change in fair value - - - 14,616 - 14,616

- Transferred to profit or loss - - - (681) - (681)

- Related tax - - - (3,342) - (3,342)

Change in ECL reserve - - (71) - - (71)

Total other comprehensive (expense)/income for the period - - (71) 10,593 - 10,522

Profit for the period - - - - 19,930 19,930

Total comprehensive (expense)/income for the period - - (71) 10,593 19,930 30,452

At 31 March 2019 555,000 91,000 178 13,203 841,651 1,501,032

2019


2020

Non-distributable


3


Company No. 200801017151 (818444-T)



STATEMENT OF CASH FLOWS FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2020

31 March 31 March

2020 2019

RM'000 RM'000

Cash flows from operating activities

Profit before income tax expense and zakat 24,380 25,069

Adjustments for:

Net gain from disposal of:

- Financial investments at FVOCI (7,810) (681)

Depreciation of equipment 630 726

Depreciation of ROU assets 567 674

Impairment allowance and provisions 41,055 27,478

Finance cost 20 36

Share-based costs 105 89

Unrealised loss/(gain) on:

- Financial assets at FVTPL 63 2

- Derivatives 544 (806)

Operating profit before changes in working capital 59,554 52,587

Changes in operating assets and operating liabilities:

Financial assets at FVTPL 17 (6,120)

Financing and advances (150,582) (340,646)

Derivative financial assets (9,566) (3,061)

Other assets 31,136 35,572

Statutory deposits with BNM 69,200 (17,000)

Deposits from customers (402,470) 6,285

Investment accounts due to designated financial institution 22,445 (34,373)

Deposits and placements of banks and other financial institutions 261,102 (162,727)

Bills and acceptances payable 1,108 (1,602)

Derivative financial liabilities 10,109 2,251

Other liabilities 27,037 30,114

Cash used in operations (80,910) (438,720)

Income tax and zakat paid (10,614) (14,229)

Net cash used in operating activities (91,524) (452,949)

Cash flows from investing activities

Acquisition of financial investments at FVOCI (3,675,000) (1,910,000)

Proceeds from disposal of financial investments at FVOCI 3,598,605 1,864,022

Acquisition of equipment (52) (32)

Proceeds from disposal of equipment - -

Net cash used in investing activities (76,447) (46,010)

Cash flows from financing activity

Payment of lease liabilities (585) (693)

Net cash used in financing activity (585) (693)

Net decrease in cash and cash equivalents (168,556) (499,652)

Cash and cash equivalents at 1 January 958,141 959,600

Cash and cash equivalents at 31 March 789,585 459,948

Details of cash and cash equivalents are disclosed in Note 9 to the unaudited condensed interim financial

statements.


4


Company No. 200801017151 (818444-T)


NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS - 31 MARCH 2020

GENERAL INFORMATION

PERFORMANCE REVIEW

ECONOMIC PERFORMANCE AND PROSPECTS

1 BASIS OF PREPARATION

The Bank is a licensed Islamic Bank principally engaged in Islamic Banking and related financial services. There were no significant changes to these activities during the financial period.

Due to significant worsening of the macroeconomic outlook as a result of COVID-19 both domestically and globally, Bank Negara Malaysia has projected Malaysia’s Gross Domestic Product ("GDP") growth to be between -2.0% and 0.5% in 2020. In the first quarter of 2020, Malaysia's GDP slowed to 0.7% compared to 3.6% in fourth quarter of 2019. The Malaysian Government introduced several countercyclical policy measures to mitigate the economic impact of the pandemic. These measures include offering economic stimulus packages such as the Special Relief Facility, utilisation of BNM Funds for SMEs (including micro-credit schemes like Agrofood facility and Micro Enterprise facility), continued progress of public projects and higher public sector expenditure, complemented by Overnight Policy Rate ("OPR") reductions and lowering of the statutory reserves requirement for banks to provide additional liquidity to the banking system, as well as cashflow/debt relief for individuals and SMEs in the form of 6-months loan moratoriums and deferment of tax payments. The unprecedented nature and scale of fiscal and monetary policy interventions across economies are expected to cushion the economic disruptions caused by COVID-19 and to support a gradual normalisation of economic activities upon the successful containment of the pandemic. The Malaysian economy is expected to gradually improve in the second half of the year after the containment measures ease and local Movement Control Order is lifted. It is expected to register a positive recovery in 2021. The Bank will continue to monitor its asset quality, capital and liquidity closely.

The Bank recorded a profit after tax of RM19.9 million for the financial period ended 31 March 2020; a marginal decrease against the corresponding period last year. The decrease was mainly due to higher allowances of RM13.6 million and overheads of RM0.6 million partly offset by income derived from shareholder funds of RM6.2 million, net income from investment account funds of RM2.6 million, income from investment of depositors' funds and others of RM2.5 million and lower income attributable to depositors of RM2.2 million and lower tax of RM0.7 million. Allowances increased by RM13.6 million mainly due to higher recoveries from restricted profit sharing investment account holder of RM29.8 million in the previous year, and for the current year, higher Stage 1 and Stage 2 ECL allowance of RM17.3 million and lower bad debt recovered of RM1.5 million partly offset by lower net Stage 3 ECL charge of RM35.0 million. Gross financing and advances increased by RM147 million or 1% in the first quarter of 2020, mainly from small and medium enterprises ("SMEs") in the transport, storage and communication, manufacturing and agriculture sectors. Deposits from customers decreased by RM0.4 billion over the same period to RM12.2 billion as the bank diversified its sources of funding to a more balanced business banking: retail mix. Deposits from individuals increased by RM0.7 billion, whilst deposits from non-bank financial institutions decreased by RM0.7 billion and corporates by RM0.4 billion. The Bank remains well capitalised with common equity Tier 1 and Tier 1 capital ratios of 16.322% and total capital ratio of 19.000%.

The accounting policies set out below have been applied consistently to the periods presented in the unaudited condensed interim financial statements, except as disclosed in Note 1(a) to the interim financial statements.

5


Company No. 200801017151 (818444-T)


NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS - 31 MARCH 2020 (continued)

1 BASIS OF PREPARATION (continued)

(a) Statement of compliance

Effective for annual periods commencing on or after 1 January 2022

(b) Use of estimates and judgements

Amendments to MFRS 101, Presentation of Financial Statements and MFRS 108, Accounting Policies,

Changes in Accounting Estimates and Errors

Interest Rate Benchmark Reform (Amendments to MFRS 9, Financial Instruments , MFRS 139,

Financial Instruments: Recognition and Measurement and MFRS 7, Financial Instruments: Disclosures )

Classification of Liabilities as Current or Non-current (Amendments to MFRS 101, Presentation of

Financial Statements )

The unaudited condensed interim financial statements of the Bank have been prepared under the historical cost convention except for the assets and liabilities which are stated at fair value as disclosed in the notes to the unaudited condensed interim financial statements: financial assets at FVTPL, financial investments at FVOCI and derivative financial instruments. The unaudited condensed interim financial statements have been prepared in accordance with Malaysian Financial Reporting Standard ("MFRS") 134, International Accounting Standard 34, the requirements of the Companies Act 2016 in Malaysia and BNM's Shariah requirements. The unaudited condensed interim financial statements should be read in conjunction with the audited annual financial statements of the Bank for the financial year ended 31 December 2019. The explanatory notes attached to the unaudited condensed interim financial statements provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Bank since the financial year ended 31 December 2019. The following accounting standards, interpretations and amendments have been adopted by the Bank during the current period:

The initial application of the above mentioned accounting standards, interpretation and amendments do not have any material impact to the financial statements of the Bank. The Bank has not adopted the following amendment to accounting standards issued by the Malaysian Accounting Standards Board ("MASB") as it is not yet effective:

The preparation of the unaudited condensed interim financial statements in conformity with MFRS, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing the unaudited condensed interim financial statements, the significant judgements made by management in applying the Bank's accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited financial statements as at and for the financial year ended 31 December 2019.

The unaudited condensed interim financial statements are presented in Ringgit Malaysia ("RM"), which is the Bank's functional currency. All financial information presented in RM have been rounded to the nearest thousand, unless otherwise stated.

6


Company No. 200801017151 (818444-T)



2 SIGNIFICANT ACCOUNTING POLICIES

3 AUDITOR'S REPORT ON PRECEDING ANNUAL FINANCIAL STATEMENTS

4 SEASONALITY OF OPERATIONS

5 DEBT SECURITIES

6 DIVIDEND

7 SIGNIFICANT AND SUBSEQUENT EVENTS

8 UNUSUAL ITEMS DUE TO THEIR NATURE, SIZE OR INCIDENCE

9 CASH AND CASH EQUIVALENTS


2020 2019

RM'000 RM'000

Cash and balances with banks and other financial institutions 87,310 110,496

Deposit and placements with BNM 702,275 847,645

789,585 958,141

Stage 1 ECL allowance (1) (1)

789,584 958,140

No dividend was paid in respect of the financial period ended 31 March 2020.

The widespread of COVID-19 since the beginning of 2020 is a fluid and challenging situation affecting all industries and hence, the impact is difficult to reliably predict. The Bank will continue to monitor the situation closely, taking appropriate and timely actions to minimise the impact. The Bank's capital and liquidity positions remain strong and well above the regulatory requirements. There were no other material events subsequent to the end of the reporting period that require disclosure or adjustments to the unaudited condensed interim financial statements.

There were no other issuances, cancellations, repurchases and repayments of debt securities by the Bank during the financial period ended 31 March 2020.

The business operations of the Bank are not materially affected by any seasonal factors.

The auditor’s report on the financial statements for the financial year ended 31 December 2019 was not subject to any qualification.

The accounting policies applied by the Bank in these unaudited condensed interim financial statements are the same as those applied by the Bank in its audited financial statements as at and for the financial year ended 31 December 2019, except as disclosed in Note 1 (a) to the interim financial statements.

There were no unsual items affecting the assets, liabilities, equity and net income or cash flows of the Bank for the financial period ended 31 March 2020.

7


Company No. 200801017151 (818444-T)



10 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS ("FVTPL")


2020 2019

RM'000 RM'000

At fair value

Islamic Corporate Sukuk 16,250 16,330

11 FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME ("FVOCI")


2020 2019

RM'000 RM'000

At fair value

Malaysian Government Investment Issues 2,338,288 2,261,060

Malaysian Government Sukuk 96,378 94,846

Malaysian Government Islamic Treasury Bills 58,708 -

Islamic Corporate Sukuk 375,200 389,940

Islamic Negotiable Instruments of Deposit 1,348,850 1,374,877

Cagamas Sukuk 50,714 60,842

Foreign Government Sukuk 25,732 24,887

4,293,870 4,206,452

Stage 1 Stage 2 Total ECL Stage 1 Stage 2 Total ECL

12 Months Lifetime non credit- 12 Months Lifetime non credit-

ECL ECL impaired ECL ECL impaired

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 153 - 153 199 50 249 New financial assets

originated or purchased 35 - 35 205 - 205 Financial assets derecognised (12) - (12) (66) (41) (107) Net remeasurement during

the period/year (29) - (29) (185) (9) (194) At 31 March/31 December 147 - 147 153 - 153

31 December 201931 March 2020

ECL allowance for financial investments at FVOCI is recognised in the ECL reserve.

8


Company No. 200801017151 (818444-T)



12 FINANCING AND ADVANCES

(i) By type and Shariah contract

Equity based

Lease based contracts contracts

Bai' Ijarah Ijarah

Bithaman Bai' Thumma Muntahiah Musharakah

Bai' Inah Ajil Tawarruq Murabahah Dayn Al-Bai Ijarah Bi Al-Tamlik Mutanaqisah Others Total

31 March 2020 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At amortised cost and net of

unearned income

Cash line financing 8,344 9,125 - - - - 458,368 - - 3,175 479,012

Term Financing

- House financing - 7,696 - - - - - 1,844,037 73,064 - 1,924,797

- Syndicated term financing - - 549,910 - - - - 156,897 - - 706,807

- Hire purchase receivables - - - - - 161,519 - 171,883 - - 333,402

- Other term financing 198,336 28,043 2,509,096 - - - - 1,385,698 93,840 - 4,215,013

Bills receivable - - - 16,010 37,421 - - - - - 53,431

Trust receipts - - - 161 - - - - - - 161

Revolving credit - - 4,047,815 - - - - - - - 4,047,815

Claims on customers under

acceptance credits - - - 220,438 76,253 - - - - - 296,691

Other financing - - 117,402 - - - - - - - 117,402

Gross financing and advances 206,680 44,864 7,224,223 236,609 113,674 161,519 458,368 3,558,515 166,904 3,175 12,174,531

ECL allowance (259,715)

Net financing and advances 11,914,816

Sale based contracts

Included in financing and advances are specific business ventures funded by the Restricted Profit Sharing Investment Account ("RPSIA") arrangements between the Bank and its immediate holding company, OCBC Bank (Malaysia) Berhad (Note 17). The immediate holding company, being the RPSIA investor, is exposed to the risks and rewards of the business venture and accounts for the impairment allowances arising thereon. As at 31 March 2020, the gross exposure and ECL relating to RPSIA financing amounted to RM2,042 million (31 December 2019: RM2,022 million) and RM63.7 million (31 December 2019: RM61 million) respectively.

9


Company No. 200801017151 (818444-T)



12 FINANCING AND ADVANCES (continued)

(i) By type and Shariah contract (continued)

Equity based

Lease based contracts contracts

Bai' Ijarah Ijarah

Bithaman Bai' Thumma Muntahiah Musharakah

Bai' Inah Ajil Tawarruq Murabahah Dayn Al-Bai Ijarah Bi Al-Tamlik Mutanaqisah Others Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At amortised cost and net of

unearned income

Cash line financing 10,059 8,631 - - - - 432,413 - - 2,507 453,610

Term Financing

- House financing - 8,095 - - - - - 1,858,021 76,302 - 1,942,418

- Syndicated term financing - - 460,608 - - - - 167,195 - - 627,803

- Hire purchase receivables - - - - - 165,094 - 179,681 - - 344,775

- Other term financing 216,361 30,253 2,388,283 - - - - 1,419,122 96,927 - 4,150,946

Bills receivable - - - 16,801 35,930 - - - - - 52,731

Trust receipts - - - 135 - - - - - - 135

Revolving credit - - 3,905,317 - - - - - - - 3,905,317

Claims on customers under

acceptance credits - - - 346,543 73,757 - - - - - 420,300

Other financing - - 129,602 - - - - - - - 129,602

Gross financing and advances 226,420 46,979 6,883,810 363,479 109,687 165,094 432,413 3,624,019 173,229 2,507 12,027,637

ECL allowance (222,348)

Net financing and advances 11,805,289

Sale based contracts

31 December 2019

10


Company No. 200801017151 (818444-T)





2020 2019

RM'000 RM'000

(ii) By type of customer

Domestic non-bank financial institutions 1,031,334 1,027,120

Domestic business enterprises

- Small and medium enterprises 2,246,853 2,056,745

- Others 5,575,579 5,610,952

Individuals 2,186,369 2,212,138

Foreign entities 1,134,396 1,120,682

12,174,531 12,027,637

(iii) By profit rate sensitivity

Fixed rate

- House financing 46,963 47,513

- Hire purchase receivables 161,519 165,095

- Other fixed rate financing 1,377,727 1,550,059

Variable rate

- Base rate/Base financing rate plus 4,194,395 4,141,835

- Cost plus 6,325,792 6,079,866

- Other variable rates 68,135 43,269

12,174,531 12,027,637

(iv) By sector

Agriculture, hunting, forestry and fishing 1,688,631 1,666,299

Mining and quarrying 312,919 300,835

Manufacturing 1,536,274 1,503,469

Electricity, gas and water 38,387 30,509

Construction 782,929 761,864

Real estate 1,211,600 1,212,724

Wholesale & retail trade and restaurants & hotels 1,240,038 1,242,882

Transport, storage and communication 258,113 195,592

Finance, insurance and business services 1,221,081 1,214,855

Community, social and personal services 563,216 565,211

Household

- Purchase of residential properties 1,934,109 1,952,047

- Purchase of non-residential properties 47,603 46,360

- Others 323,453 332,265

Others 1,016,178 1,002,725

12,174,531 12,027,637

(v) By geographical distribution determined based on where the credit risk resides

Malaysia 11,094,746 10,966,315

Singapore 595,967 579,932

Other ASEAN countries 149,839 162,160

Rest of the world 333,979 319,230

12,174,531 12,027,637

11


Company No. 200801017151 (818444-T)





2020 2019

RM'000 RM'000

(vi) By residual contractual maturity

Up to one year 4,921,780 4,910,823

Over one year to three years 834,673 819,478

Over three years to five years 1,523,906 1,425,582

Over five years 4,894,172 4,871,754

12,174,531 12,027,637

13 IMPAIRED FINANCING AND ADVANCES

(a) Movements in credit-impaired financing and advances


2020 2019

RM'000 RM'000

At 1 January 345,692 375,100

Impaired during the period/year 87,283 378,458

Reclassified as non credit-impaired (11,667) (142,180)

Amount recovered (32,725) (169,849)

Amount written off (5,499) (96,120)

Effect of foreign exchange difference - 283

At 31 March/31 December 383,084 345,692

Stage 3 ECL allowance (110,192) (109,208)

Net impaired financing and advances 272,892 236,484


2020 2019

RM'000 RM'000

(i) By sector

Agriculture, hunting, forestry and fishing 3,363 3,635

Manufacturing 35,246 36,228

Construction 87,291 41,916

Real estate 557 666

Wholesale & retail trade and restaurants & hotels 97,389 104,506

Transport, storage and communication 3,467 3,468

Finance, insurance and business services 8,787 7,612

Community, social and personal services 714 733

Household

- Purchase of residential properties 70,748 65,633

- Purchase of non-residential properties 763 761

- Others 20,371 22,007

Others 54,388 58,527

383,084 345,692

(ii) By geographical distribution determined based on where the credit risk resides

Malaysia 378,274 341,775

Singapore 4,793 3,899

Other ASEAN country 17 18

383,084 345,692

Included in the credit-impaired financing and advances are specific business ventures funded by the RPSIA arrangements between the Bank and its immediate holding company, OCBC Bank (Malaysia) Berhad. The immediate holding company, as the RPSIA holder, is exposed to the risks and rewards of the business ventures and accounts for the Stage 3 ECL arising thereon. As at 31 March 2020, the credit-impaired RPSIA funded gross exposures and Stage 3 ECL recoverable from the RPSIA holder amounted to RM54 million (31 December 2019: RM59 million) and RM33 million (31 December 2019: RM33 million) respectively.

12


Company No. 200801017151 (818444-T)



13 IMPAIRED FINANCING AND ADVANCES (continued)

(b) Movements in ECL allowance for financing and advances:


Credit-impaired 2020 Credit-impaired 2019

Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total

ECL ECL ECL ECL ECL ECL ECL ECL

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 59,706 53,434 109,208 222,348 58,957 57,165 120,198 236,320

Transferred to Stage 1 12,867 (10,026) (2,841) - 64,823 (56,128) (8,695) -

Transferred to Stage 2 (9,159) 10,127 (968) - (18,523) 26,608 (8,085) -

Transferred to Stage 3 (2,236) (11,265) 13,501 - (1,953) (58,309) 60,262 -

New financial assets originated or purchased 8,290 2,143 - 10,433 31,681 8,072 - 39,753

Financial assets derecognised (5,226) (4,183) (1,740) (11,149) (24,198) (14,370) (11,171) (49,739)

Net remeasurement during the period/year (808) 44,957 954 45,103 (50,925) 90,391 59,215 98,681

Written-off - - (5,499) (5,499) - - (96,120) (96,120)

Other movements 892 10 (2,423) (1,521) (156) 5 (6,396) (6,547)

At 31 March/31 December 64,326 85,197 110,192 259,715 59,706 53,434 109,208 222,348

At 1 January

- Financing and advances 56,055 46,736 109,208 211,999 55,816 56,927 120,198 232,941

- Financing related commitments and

financial guarantees 3,651 6,698 - 10,349 3,141 238 - 3,379

59,706 53,434 109,208 222,348 58,957 57,165 120,198 236,320

At 31 March/December

- Financing and advances 63,496 70,393 110,192 244,081 56,055 46,736 109,208 211,999

- Financing related commitments and

financial guarantees 830 14,804 - 15,634 3,651 6,698 - 10,349

64,326 85,197 110,192 259,715 59,706 53,434 109,208 222,348

Impact of movements in gross carrying amount on ECL allowance

Non credit-impaired Non credit-impaired

Stage 1 ECL allowance increased by RM4.6 million during the financial period mainly due to financing and advances transferred to Stage 1 from improvements in credit quality and from

newly originated financing and advances partially offset by transfers to Stage 2 and Stage 3 and repayments.

Stage 2 ECL allowance increased by RM31.8 million mainly due to higher net remeasurement arising from COVID-19 weakened macroeconomic outlook, partially mitigated by migration of

financing and advances to Stage 1 and Stage 3.

Stage 3 ECL allowance increased by RM1.0 million mainly due to transfers from Stage 2 as credit losses are expected to increase with worsened macro economic outlook for full year 2020

partly offset by higher write-offs.13


Company No. 200801017151 (818444-T)



14 DERIVATIVE FINANCIAL ASSETS AND LIABILITIES

Contract or Contract or

underlying underlying

principal principal

amount Assets Liabilities amount Assets Liabilities

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Trading

Foreign exchange

derivatives

- Forwards 72,305 653 149 68,693 392 152

- Swaps 91,656 719 590 80,175 552 556

Profit rate derivatives

- Swaps 391,200 20,483 21,812 360,000 11,345 11,734

555,161 21,855 22,551 508,868 12,289 12,442

15 OTHER ASSETS31 March 31 December

2020 2019

RM'000 RM'000

Profit receivable 28,098 31,047

Other receivables, deposits and prepayments 3,273 7,255

Amount due from immediate holding company 6,764 31,955

Amount due from ultimate holding company 751 309

Amount due from related company 2 3

38,888 70,569

16 DEPOSITS FROM CUSTOMERS


2020 2019

RM'000 RM'000

(a) By type of deposit

Savings deposits

- Tawarruq 563,954 510,986

- Qard 194,698 183,948

Demand deposits

- Tawarruq 385,241 543,334

- Qard 3,834,164 3,669,057

Term Deposits

- Commodity Murabahah 6,837,100 6,622,560

- Qard 2,119 7,754

Negotiable instruments of deposit

- Bai' Inah - 600,000

- Bai Bithaman Ajil 78,368 77,532

Short term deposits

- Tawarruq 293,483 376,426

12,189,127 12,591,597

The amounts due from ultimate and immediate holding companies and related company are unsecured, profit-free and

repayable on demand.

31 March 2020 31 December 2019

Fair value Fair value

14


Company No. 200801017151 (818444-T)



16 DEPOSITS FROM CUSTOMERS (continued)


2020 2019

RM'000 RM'000

(b) By type of customer

Government and statutory bodies 579,722 768,322

Non-bank financial institutions 1,089,778 1,770,716

Business enterprises 5,512,867 5,813,790

Individuals 4,560,136 3,873,230

Foreign entities 229,667 147,170

Others 216,957 218,369

12,189,127 12,591,597

(c) By maturity structure of term deposits, negotiable instruments of

deposit and short-term deposits

Up to six months 5,149,036 6,105,962

Over six months to one year 2,052,093 1,565,368

Over one year to three years 9,941 12,942

Over three years to five years - -

7,211,070 7,684,272

17 INVESTMENT ACCOUNTS DUE TO DESIGNATED FINANCIAL INSTITUTION


2020 2019

RM'000 RM'000

Mudharabah RPSIA

Licensed bank 2,041,268 2,018,823

Amount receivable from immediate holding company under RPSIA (32,769) (32,769)

2,008,499 1,986,054

18 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS


2020 2019

RM'000 RM'000

Non-Mudharabah

Licensed banks 1,019,847 758,235

Other financial institutions 4,444 4,954

1,024,291 763,189

Included in the above are deposits and placements of its immediate holding company of RM1,009 million

(2019: RM720 million), which are unsecured and profit-bearing.

15


Company No. 200801017151 (818444-T)



19 OTHER LIABILITIES


2020 2019

RM'000 RM'000

Profit payable 80,353 79,323

Other payables and accruals 47,456 72,391

Amount due to immediate holding company 63,336 12,218

Amount due to related company - 245

Amount due to ultimate holding company 248 176

Equity compensation benefits 794 692

Lease liabilities 3,230 3,047

Provision for commitments and contingencies 2,034 2,034

197,451 170,126

20 SUBORDINATED SUKUK

21 INCOME DERIVED FROM INVESTMENT OF DEPOSITORS' FUNDS AND OTHERS

31 March 31 March

2020 2019

RM'000 RM'000

Income derived from investment of:

(i) Term deposits/General investment deposits 83,359 81,978

(ii) Other deposits 77,690 76,580

161,049 158,558

On 24 November 2016, the Bank issued to its immediate holding company, OCBC Bank (Malaysia) Berhad, a RM200 million Basel III-compliant redeemable 10 years non-callable 5 years subordinated sukuk under the principle of Murabahah at a profit rate of 4.80% per annum payable semi-annually in arrears from the issue date with the last periodic profit payment to be made up to (but excluding) the maturity date or early redemption of the Murabahah subordinated sukuk, whichever is earlier. The Bank may, at its option and subject to the prior approval of BNM, exercise its call option and may redeem in whole or in part, whichever is earlier, the Murabahah subordinated sukuk on 24 November 2021 and any coupon payment date thereafter. In addition to the first call in 2021, the Murabahah subordinated sukuk may also be redeemed if a qualifying tax event or a change of qualification event occurs. The Murabahah subordinated sukuk can be written off, in whole or in part, if the Bank is determined by BNM and/or Malaysia Deposit Insurance Corporation to be non-viable. This Murabahah subordinated sukuk qualifies in full as Tier 2 capital for the purpose of determining the capital adequacy ratio of the Bank.

The amount due to ultimate and immediate holding companies and related company are unsecured, profit free and repayable on demand.

16


Company No. 200801017151 (818444-T)



21 INCOME DERIVED FROM INVESTMENT OF DEPOSITORS' FUNDS AND OTHERS (continued)

31 March 31 March

2020 2019

RM'000 RM'000

(i) Income derived from investment of term/general investment deposits

Finance income and hibah

Financing and advances

- Finance income earned other than recoveries 58,356 61,615

- Recoveries from credit-impaired financing 844 529

- Discount unwind from credit-impaired financing 1,113 1,098

Financial assets at FVTPL 77 60

Financial investments at FVOCI 17,369 16,911

Deposits and placements with banks and other financial institutions 1,741 1,305

79,500 81,518

Other trading income

Unrealised loss on financial assets at FVTPL (29) (1)

Other operating income

Net gain from sale of financial investments at FVOCI 3,587 315

Others 301 146

83,359 81,978

(ii) Income derived from investment of other deposits





- Discount unwind from credit-impaired financing 1,037 1,025



Deposits and placements with banks and other financial institutions 1,622 1,220

74,094 76,151


Unrealised loss on financial assets at FVTPL (27) (1)

Other operating incomeNet gain from sale of financial assets held-for-trading - -

Net gain from sale of financial investments at FVOCI 3,343 294

Others 280 136

77,690 76,580

17


Company No. 200801017151 (818444-T)



22 INCOME DERIVED FROM INVESTMENT OF INVESTMENT ACCOUNT FUNDS

31 March 31 March

2020 2019

RM'000 RM'000




- Recoveries from credit-impaired financing 1,002 1,597

- Discount unwind from credit-impaired financing - (812)

20,233 14,343

23 INCOME DERIVED FROM INVESTMENT OF SHAREHOLDER'S FUNDS

31 March 31 March

2020 2019

RM'000 RM'000





- Discount unwind from credit-impaired financing 273 250



Deposits and placements with banks and other financial institutions 427 298

19,511 18,606


Unrealised loss on financial assets at FVTPL (7) -

Other operating income

Commission 6,885 3,561

Service charges and fees 4,456 3,707

Net gain from sale of financial investments at FVOCI 880 72

Others 74 33


Net trading (loss)/gain

- Foreign currency (1,402) (896)

- Trading derivatives 5,699 3,459

- Revaluation of derivatives (544) 806

35,552 29,348

18


Company No. 200801017151 (818444-T)



24 IMPAIRMENT ALLOWANCE/(WRITEBACK) AND PROVISIONS

31 March 31 March

2020 2019

RM'000 RM'000


Stage 1 and Stage 2 ECL made during the period 36,383 19,147

Stage 3 ECL

- Made during the period 17,989 53,804

- Written back (9,083) (9,903)

Credit-impaired financing recovered (4,228) (5,705)

Recovery from RPSIA holder* - (29,794)

Financial investments at FVOCI

Stage 1 and Stage 2 ECL write back during the period (6) (71)

41,055 27,478

* The RPSIA holder is the Bank's immediate holding company (Note 17).

25 INCOME ATTRIBUTABLE TO DEPOSITORS

31 March 31 March

2020 2019

RM'000 RM'000

Deposits from customers

- Non-Mudharabah 81,106 82,209

Deposits and placements of banks and other financial institutions

- Non-Mudharabah 5,788 6,933

Subordinated sukuk 2,393 2,367

Lease liabilities 20 36

89,307 91,545

26 INCOME ATTRIBUTABLE TO INVESTMENT ACCOUNT HOLDER

31 March 31 March

2020 2019

RM'000 RM'000

Investment accounts due to designated financial institution

- Mudharabah 14,045 10,698

19


Company No. 200801017151 (818444-T)



27 OPERATING EXPENSES

31 March 31 March

2020 2019

RM'000 RM'000

Personnel expenses

Wages, salaries and bonus 5,081 6,214

Employees Provident Fund contributions 901 1,001

Share-based costs 105 89

Others 985 947

7,072 8,251

Establishment expenses

Depreciation of equipment 630 726

Depreciation of ROU assets 567 674

Rental of premises 3 3

Repair and maintenance 113 226

Information technology costs 169 155

Hire of equipment 30 32

Others 700 728

2,212 2,544

Marketing expenses

Advertising and business promotion 91 128

Transport and travelling 50 77

Others 25 15

166 220

General administrative expenses

Shared service fees to immediate holding company 29,349 26,427

IT and transaction processing fees to related companies 7,382 7,017

Others 1,866 3,000

38,597 36,444

Total operating expenses 48,047 47,459

28 INCOME TAX EXPENSE

31 March 31 March

2020 2019

RM'000 RM'000

Malaysian income tax

- Current period 8,189 8,432

Deferred tax

- Origination and reversal of temporary differences (3,709) (3,293)

4,480 5,139

29 CAPITAL COMMITMENTS31 March 31 December

2020 2019

RM'000 RM'000

Capital commitments in respect of property and equipment

- Contracted but not provided for 47 47

20


Company No. 200801017151 (818444-T)



30 COMMITMENTS AND CONTINGENCIES

Credit Risk Credit Risk

Principal equivalent weighted Principal equivalent weighted

amount amount amount amount amount amount

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Direct credit substitutes 95,851 95,851 83,194 97,036 97,036 93,643

Transaction-related contingent items 378,463 192,845 120,713 374,020 190,518 130,795

Short-term self-liquidating trade-related contingencies 19,097 4,389 1,912 17,580 6,477 3,802

Foreign exchange related contracts

- Less than one year 81,589 1,429 805 68,693 795 791

- One year to five years 82,372 9,672 3,200 80,175 10,974 4,008

Profit rate related contracts

- Five years and above 391,200 55,506 44,445 360,000 40,683 30,416

Formal standby facilities and credit lines

- Original maturity exceeding one year 498,820 395,043 355,414 422,525 334,720 267,231

Other unconditionally cancellable commitments 2,319,097 146,921 23,428 2,720,470 126,687 20,308

3,866,489 901,656 633,111 4,140,499 807,890 550,994

31 December 201931 March 2020

In the normal course of business, the Bank makes various commitments and incurs certain contingent liabilities with legal recourse to its customers. There were no material losses anticipated as a result of these transactions.

The credit equivalent and risk weighted amounts were computed using the credit conversion factors and risk weights defined by BNM for regulatory capital adequacy purposes.

21


Company No. 200801017151 (818444-T)



31 FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value hierarchy of financial instruments

Fair value

determined as

Type of financial

assets

Type of financial - -

liabilities

Financial instruments carried at fair valueLevel 1 Level 3 Total

31 March 2020 RM'000 RM'000 RM'000

Financial assets at fair value

Financial assets at FVTPL - - 16,250

Financial investments at FVOCI 2,396,996 - 4,293,870

Derivative financial assets 27 65 21,855

2,397,023 65 4,331,975

Financial liabilities at fair value

Derivative financial liabilities 29 21 22,551

31 December 2019

Financial assets at fair valueFinancial assets at FVTPL - - 16,330

Financial investments at FVOCI 2,261,060 - 4,206,452

Derivative financial assets 14 - 12,289

2,261,074 - 4,235,071


Derivative financial liabilities 91 - 12,442

Private debt equity

instruments.

Deposits and placements with

banks and other financial

institutions.

Deposits and placements of

banks and other financial

institutions.

Level 1 fair value is

derived from quoted

price (unadjusted) in

active markets for

identical financial assets

and financial liabilities

that the entity can

access at the

measurement date.

Level 2 fair value is estimated

using inputs other than quoted

prices included within Level 1

that are observable for the

financial assets and liabilities,

either directly or indirectly.

Level 3 fair value is

estimated using

unobservable inputs for

the financial assets and

liabilities.

Actively traded

government and

government agency

securities.

Corporate and other

governments sukuk.

OTC derivatives.

Deposits from customers.

Investment accounts due to

designated financial institutions.

Corporate sukuk with

illiquid markets.Over-the counter ("OTC")

derivatives.

Financing and advances.

Actively traded quoted

equity securities of

corporations.

Subordinated sukuk.

1,973,997

12,351

1,934,887

22,501

1,945,392

12,275

16,330

Level 2

RM'000

16,250

1,896,874

21,763

The Bank measures the fair value of financial assets and liabilities using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. The valuation hierarchy and the types of instruments classified into each level within that hierarchy, are set out below: Level 1 Level 2 Level 3

22


Company No. 200801017151 (818444-T)



31 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

Fair value hierarchy of financial assets and liabilities (continued)

Movements in the Bank's Level 3 financial assets and liabilities are as follows:

Financial assets at fair value

At 1 January

Transferred into Level 3

Settled/Disposed

Unrealised gain recognised in profit or loss

At 31 March/31 December


At 1 January

Transferred into Level 3

Settled/Disposed

Unrealised loss recognised in profit or loss

At 31 March/31 December

Bank

Asset

Derivative financial

assets

Liability

Derivative financial

liabilities


2020 2019

- -

RM'000RM'000

65 -

- -

21 -

-

(6)

65 -

6 -

technique input

(5)

- 5

Valuation Unobservable

21 -

2020 2019

21 - trading

Fair value Fair value Classification

model deviation

Standard

65 - trading model deviation


-

Standard

Hedge for Option pricing

Hedge for Option pricing

RM'000 RM'000

The following table shows the valuation techniques used in the determination of fair value within Level 3, as well as the unobservable inputs used in the valuation model:

The Bank considers that any reasonably possible changes to the unobservable input will not result in a significant financial impact.

23


Company No. 200801017151 (818444-T)



32 CAPITAL ADEQUACY


2020 2019

RM'000 RM'000

Common Equity Tier 1 ("CET 1") capital

Paid-up ordinary share capital 555,000 555,000

Retained earnings 986,195 986,195

Other reserves 117,227 114,778

Regulatory adjustment (113,958) (107,214)

1,544,464 1,548,759

Tier 2 capital

Stage 1 and 2 ECL and qualifying regulatory reserves

under the Standardised Approach 2,638 2,818

Surplus eligible provisions over expected losses 50,762 49,474

Subordinated sukuk 200,000 200,000

253,400 252,292

Capital base 1,797,864 1,801,051

Before the effects of PSIA

CET 1 / Tier 1 capital ratio 14.266% 14.495%

Total capital ratio 16.606% 16.857%

After the effects of PSIA

CET 1 / Tier 1 capital ratio 16.322% 16.704%

Total capital ratio 19.000% 19.425%

Breakdown of risk-weighted assets ("RWA") in the various categories of risk-weights:


2020 2019

RM'000 RM'000

Total RWA for credit risk 8,671,346 8,471,121

Total RWA for market risk 1,719 9,820

Total RWA for operational risk 789,571 790,685

9,462,636 9,271,626

In accordance with BNM's Guidelines on the Recognition and Measurement of Profit Sharing Investment Account as Risk Absorbent, the credit and market risks of the assets funded by the RPSIA which qualify as risk absorbent are excluded from the total capital ratio calculation. As at 31 March 2020, credit risks related to RPSIA assets excluded from the total capital ratio calculation amounted to RM1,364 million (31 December 2019: RM1,413 million).

The capital ratios are computed in accordance with BNM's Capital Adequacy Framework for Islamic Banks (Capital Components).

24

OCBC AL-AMIN BANK BERHAD Company No. 200801017151 … Results/pdf... · 2020. 6. 9. · ocbc...

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